Modesto fears harm from new prevailing wage law

kvaline@modbee.comOctober 14, 2013 

— Modesto is worried that a new state law on what is called the prevailing wage will harm its ability to keeps its parks and golf courses clean and green and its city buildings neat and tidy.

Gov. Jerry Brown signed Senate Bill 7 into law over the weekend. The law requires charter cities – such as Modesto – to pay the prevailing wage on construction and maintenance projects to receive state funding.

The prevailing wage is set by the state Department of Industrial Relations. Modesto pays the prevailing wage on projects funded with state and federal money, but it does not pay the prevailing wage – often called the union wage – on the more than a dozen maintenance contracts it funds with its own money. Those contracts are worth more than $4.7 million annually and are for such services as janitors to clean city buildings and landscape workers to maintain the city’s 72 parks.

Not paying the prevailing wage saves charter cities money and lets them stretch their dollars further. A League of California Cities official has said prevailing wages can increase the costs by 10 percent to 30 percent. But SB7 supporters say it creates well-paying, middle-class jobs and provides California with well-trained construction workers.

State Sen. Anthony Cannella, R-Ceres, joined Senate President Pro Tem Darrell Steinberg, D-Sacramento, in introducing the bill in February, which was backed by trade unions and other labor groups.

SB7 closes what supporters call a loophole that had allowed cities such as Modesto not to pay the prevailing wage on projects it funded while receiving state funding for other projects on which workers received the prevailing wage.

The law will not take effect until Jan. 1, 2015, and it exempts construction projects of no more than $25,000 and maintenance projects of no more than $15,000.

Deputy City Manager Dee Williams-Ridley said Modesto receives significant amounts of state funding that could be in jeopardy. As examples of past projects, she said the city received a $128 million state loan to upgrade its waste-water treatment system and last week California transportation commissioners approved $43.8 million for a new Pelandale Avenue interchange at Highway 99.

“For us, it’s pretty impactful,” she said. “This is significant not only for us but for other charter cities.”

Merced also is a charter city; spokesman Mike Conway said his city may not be able to do as many sewer and waste-water projects funded by Merced ratepayers if it has to pay the prevailing wage.

“We’re definitely concerned,” he said.

About a quarter of California’s 482 cities are charter cities. Stockton is the only other one in the Northern San Joaquin Valley. The rest of the cities are what are known as general law cities, which are required to pay the prevailing wage on all projects, no matter the funding source.

Charter cities have more flexibility and control over how they govern themselves. Fifty-one of the state’s 121 charter cities don’t pay the prevailing wage on projects they fund themselves, said Chris McKenzie, executive director of the League of California Cities, which opposes the law.

McKenzie said he would not be surprised if one of those 51 cities mounted a legal challenge against the law, especially in light of last year’s state Supreme Court decision that said charter cities don’t have to use the prevailing wage in spending their own money.

“I think it’s just another erosion of both local control and local rights,” Modesto Mayor Garrad Marsh said. “So many politicians talk about wanting to give back more to local control, let local people take responsibility for their future. But at the same time, they do stuff like SB7, which is really a direct assault on local control.”

Jeff Macedo, Cannella’s communications director, said it was unfortunate Modesto did not play a greater role as the bill was being debated, but added that the senator is interested in talking further with city officials about their concerns.

Bee staff writer Kevin Valine can be reached at kvaline@modbee.com or (209)578-2316.

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